FOR PUBLICATION



### UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ORLANDO GARCIA,

Plaintiff

- Appellant,

v.

GATEWAY HOTEL L.P., a California Limited Partnership,

Defendant

-

Appellee. No. 21

- 55926

D.C. No.
2:20

- cv

- 10752

- PA

- GJS

OPINION

Appeal from the United States District Court
for the Central District of California Percy Anderson, District Judge, Presiding

Argued and Submitted February 13, 2023

Pasadena, California

Filed September 15, 2023

Before: A. Wallace Tashima, Andrew D. Hurwitz, and

Bridget S. Bade, Circuit Judges.

Opinion by Judge Bade ; Dissent by Judge Hur

w itz2 G ARCIA V

. G ATEWAY H OTEL L.P.

SUMMARY *

Americans with Disabilities Act / Costs

The panel affirmed the district court’s award of costs to the defendant in an action brought under the Americans with Disabilities Act (“ADA”).

Federal Rule of Civil Procedure 54(d)(1) allows courts the discretion to award costs to prevailing parties unless a federal statute “provides otherwise.” The panel held that Brown v. Lucky Stores, Inc. , 246 F.3d 1182 (9th Cir. 2001) (addressing the ADA standard for awarding costs to defendants), was effectively overruled by Marx v. General Revenue Corp. , 458 U.S. 371 (2013) (holding that an award of costs in an action brought under the Fair Debt Collection Practices Act is governed by Rule 54(d)(1)). The panel held that, accordingly, the fee

- and cost

- shifting provision of the ADA, 42 U.S.C. § 12205, does not “provide otherwise” within the meaning of Rule 54(d)(1). Rule 54(d)(1) therefore governs the award of costs to a prevailing ADA
defendant and allows such an award in the court’s discretion. The panel concluded that in Green v. Mercy Housing, Inc.

, 991 F.3d 1056 (9th Cir. 2021) (applying Brown in a suit under the Fair Housing Act), the court did not hold, sub
silentio , that Brown and Marx are reconcil able. Because Rule 54(d)(1) controls whether defendants may be awarded costs in this ADA action, the district court did not abuse its discretion in denying the plaintiff’s motion to retax costs,

* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.G ARCIA V

. G ATEWAY H OTEL L.P. 3

thereby keeping the court’s prior award of costs to the
defendant intact.

Dissenting, Judge Hurwitz agreed with the majority that
after Marx , Rule 54(d)(1) controls the award of costs to a prevailing defendant in an ADA action and that prior caselaw holding that the ADA “provides otherwise” than Rule 54(d)(1) cannot be reconciles with Marx

. Judge Hurwitz, however, wrote that the three

- judge panel was not free to reach those conclusions because it was bound by

Green ’s holding regarding an identical costs provision in the Fair Housing Act.

COUNSEL

Dennis J. Price II (argued), Seabock Price APC, Pasadena, California; Russell C. Handy, Potter Handy LLP, San Francisco, California; for Plaintiff

- Appellant.

Phillip H. Stillman (argued), Stillman & Associates, Miami Beach, Florida, for Defendant

- Appellee.

OPINION

BADE, Circuit Judge:

This case requires us to clarify the circumstances under which a defendant may be awarded its costs in an action brought under the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101 et seq . Appellee Gateway Hotel L.P. (“Gateway”) contends that the standard for awarding costs to ADA defendants is governed by Federal Rule of Civil Procedure 54(d)(1), which allows courts the4 G ARCIA V

. G ATEWAY H OTEL L.P.

discretion to award costs to prevailing parties “[u]nless a federal statute . . . provides otherwise.” Relying on Brown v. Lucky Stores, Inc.

, 246 F.3d 1182, 1190 (9th Cir. 2001),
which extended the Christiansburg standard 1 for awarding
defendants’ attorney’s fees to awarding costs

, Appellant
Orlando Garcia contends that the ADA’s fee

- and cost

shifting statute “provides otherwise” because it permits ADA defendants to receive their costs only where there is a showing that the action was frivolous, unreasonable, or groundless. Therefore, he contends that the district court should have granted his motion to retax costs, which would
have , in effect, den ied Gateway’s application for costs.

The district court denied Garcia’s motion because it
concluded that our decision in Brown i s irreconcilable with
the United States Supreme Court’s intervening opinion in Marx v. General Revenue Corp. , 568 U.S. 371 (2013) , and

was therefore effectively overruled

. See Miller v. Gammie

, 335 F.3d 889, 900 (9th Cir. 2003) (en banc)

. T h us, th e district court concluded that Rule 54(d)(1) governs the award of costs to a prevailing ADA defendant and allows such an
award in the court’s discretion.

We agree with the district court and conclude that our
decision in Brown cannot be reconciled with the Court’s
decision in Marx , and therefore it has been effectively
overruled. Accordingly, w e hold that Rule 54(d)(1) governs
the award of costs to a prevailing ADA defendant , and such

costs may be awarded in the district court’s discretion.

1 See Christiansburg Garment Co. v. EEOC , 434 U.S. 412, 421 (1978) (concluding that “a district court may in its discretion award attorney’s fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff’s action was frivolous, unreasonable, or without foundation,
even thou gh not brought in subjective bad faith”).G ARCIA V

. G ATEWAY H OTEL L.P. 5

I.

On October 2, 2020, Garcia filed a complaint in the state court challenging Gateway’s “reservation policies and practices,” specifically “the lack of information provided on [ Gateway’s ] website that would permit [Garcia] to
determine if there are rooms” that would accommodate his disability. Garcia contended that Gateway’s failure to provide this information violated the ADA and California
law.

Gateway removed the case to federal court, and Garcia subsequently amended his complaint , dropping his claim based on California law. Gateway then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), and the district court granted the motion after concl uding that the
information on Gateway’s website complied with the ADA’s requirements. Gateway then sought an a ward of attorney’s fees, which the court denied because it could not “conclude on the record before it that [Garcia]’s case was frivolo us or unreasonable” and because there was no “clear indication that [Garcia]’s lawsuit was vexatious.”

Gateway then filed an application for costs, which the
court awarded. After filing two motions to retax costs that the court denied on procedural grounds, Garcia filed a third motion to retax costs, argu ing that costs may be awarded to defendants under the ADA only if the action was frivolous, unreasonable, or without foundation . The court denied this motion after concluding that Brown

— the legal authority cited in support of Garcia’s position

— was irreconcilable with the Supreme Court’s intervening decision in Marx

. The
district court followed “the Supreme Court’s intervening
decision in Marx rather than the Ninth Circuit’s earlier precedent” in Brown

, and determined that Rule 54(d)(1)6 G ARCIA V

. G ATEWAY H OTEL L.P.

governed the award of costs in ADA actions. And b ecause Rule 54 (d)(1) provides that costs may be awarded to a prevailing party at the district court’s discretion , the court concluded that Gateway properly received its costs in the
action and denied Garcia’s motion to retax costs.

This appeal timely followed.

II.

We review an award of costs for an abuse of discretion.
Resnick v. Netflix

, Inc. ( In re Online DVD

- Rental Antitrust Litig. ) , 779 F.3d 914, 924 (9th Cir. 2015) (citing Arakaki v. Lingle , 477 F.3d 1048, 1069 (9th Cir. 2007)). “A district court abuses its discretion if it does not apply the correct law or if it rests its decision on a clearly erroneous finding of
material fact.” Id. (quoting Jeff D. v. Otter , 643 F.3d 278, 283 (9th Cir. 2011)). We review de novo the threshold question of the applicable legal standard for awarding costs.
See Tutor

- Saliba Corp. v. City of Hailey , 452 F.3d 1055,
1059

– 60 (9th Cir. 2006) (reviewing de novo whether the
district court applied the correct legal standard in awarding attorney’s fees).

II I

.
A.

Under Rule 54(d)(1), “[u]nless a federal statute, these rules, or a court order provides otherwise, costs

— other than attorney’s fees

— should be allowed to the prevailing party.”
The issue in this case is whether the fee

- and cost

- shifting provision of the ADA, 42 U.S.C. § 12205, “provides
otherwise” and thus that statutory standard, rather than Rule 54(d)(1)

, governs the award of costs to prevailing ADA
defendants.G ARCIA V

. G ATEWAY H OTEL L.P. 7

In Marx , t he Supreme Court was asked to clarify when a federal statute “provides otherwise

. ” 568 U.S. at 373

– 74

. Marx involved a suit brought under the federal Fair Debt Collection Practices Act (“FDCPA”), which, like the ADA, includes a provision for awarding fees and costs. See id. That provision

— 15 U.S.C. § 1692k(a)(3)

— permits a court
to “award to the defendant attorney’s fees

. . . and costs” if it finds that the plaintiff brought its FDCPA action “in bad faith and for the purpose of harassment.”

After the petitioner in Marx was ordered to pay the costs of the action following an unsuccessful FDCPA suit, she appealed, arguing that the district court lacked authority to
award the defendant’s costs because § 1692k(a)(3) “set s forth the exclusive basis for awarding costs in FDCPA
cases” and “ the court had not found that she brought the case in bad faith and for the purposes of harassment.” 568 U.S.
at 375. The Tenth Circuit concluded that the district court could award costs under Rule 54(d)(1) becau se “nothing in the text, history, or purpose of § 1692k(a)(3) indicated that it was meant to displace ” th at Rule. Id. at 3 75

– 76.

The Supreme Court affirmed. Id. at 376. Although “Rule 54(d)(1) codifies a venerable presumption that prevailing parties are entitled to costs,” the Court explained
that “the word ‘should’ makes clear that the decision whether to award costs ultimately lies within the sound
discretion of the dis trict court.” Id. at 377. Thus, b ecause Rule 54 (d)(1) “grants district courts discretion to award costs, a statute is contrary to the Rule ”

— and thus “provides
otherwise”

— “ if it limits that discretion.” Id. “A s tatute,” the Court continued, “may limit a court’s discretion in several ways”: for example, a statute might “ preclude [] a court from awarding costs to prevailing defendants ” at all, or it might preclude a court from awarding costs when certain8 G ARCIA V

. G ATEWAY H OTEL L.P.

conditions have not been satisfied. Id. at 377

– 78. But a “statute providing that ‘the court may award costs to the prevailing party’ . . . is not contrary to the Rule because it
does not limit a court’s discretion.” Id. at 378.

Applying this principle, the Court concluded that § 1692k(a)(3) was not contrary to Rule 54(d)(1). Id. at 380. The petitioner in Marx argued that, while § 1692k(a)(3) did “not expressly limit a court’s discretion to award costs,” it did so “by negative implication.” Id. By “specifying that a court may award attorney’s fees and costs when an action is brought in bad faith and for the purpose of harassment,” the petitioner reasoned that “Congress intended to preclude a court from awarding fees and costs when bad faith and purpose of harassment are absent.” Id. at 381.

The Court rejected this argument for reasons that are
instructive here . “First, the background presumptions governing attorney’s fees and costs” cut against the petitioner’s negative

- implication argument. See id. at 381

– 82. The Court explained that, unlike costs

— which are presumptively awarded to prevailing parties

— the “ opposite presumption exists with respect to attorney’s fees,” which are generally paid by each litigant, “win or lose.” Id. ( citation omitted). That general rule, however, was subject

t o the federal courts ’ “ inherent power to award attorney’s fees in a narrow set of circumstances, including when a party brings an action in bad faith.” Id. at 382. Because § 1692k(a)(3) “provides that when the plaintiff brings an action in bad faith, the court may award attorney’s fees to the defendant,” it left “the background rules for attorney’s fees intact,” making it “dubious to infer congressional intent to override the background rule with respect to costs .” Id. (emphases added). Instead, § 1692k(a)(3) was “best read a sG ARCIA V

. G ATEWAY H OTEL L.P. 9

codifying a court’s pre

- existing authority to award both attorney’s fees and costs.” Id.

Second, t he structure of § 1692k(a)(3) confirmed th e conclusion that Congress did not intend to override the background rule for costs

. See id. at 383

– 84. In its entirety, § 1692k(a)(3) provided for fees and costs in two circumstances: to plaintiffs upon a showing that the defendants violated the FDCPA, and to defendants upon a showing that the plaintiff brought the action “in bad faith and
for the purpose of harassment.” Id . at 383. “If Congress had
excluded ‘and costs’” from the second sentence of § 1 692k

— which govern s awards of fees and costs to defendants

— “the expression of costs in the first sentence
and the exclusion of costs in the second sentence [would mean] that defendant s could only recover attorney’s fees when plaintiffs bring an action in bad faith.” Id. at 383. But Congress did not draft the statute that way. And Congress’s decision to draft the statute without “a negative implication that costs are precluded” weighed against reading the statute in a way that gave “effect to any implied limitation.” Id. at
384.

Third, the Court noted that “the language in § 1692k(a)(3) sharply contrasts with other statutes in which Congress has placed conditions on awarding costs to prevailing defendants.” Id. ( citing 28 U.S.C. § 1928 and 42 U.S.C. § 1988(b)). While “ Congress need not use explicit language to limit a court’s discretion under Rule 54(d)(1), its use of explicit language in other statutes caution [ ed ] against inferring [ such a ] limit ation in § 1692k(a)(3). ” Id. “Had Congress intended” § 1692k(a)(3)’s cost

- shifting provision “to displace Rule 54(d)(1), it could have easily done so by using the word ‘only’ before” providing for costs on a10 G ARCIA V

. G ATEWAY H OTEL L.P.

finding that the suit was brought in bad faith and for the purpose of harassment. Id.

Finally, t he United States, as amicus curiae , argued in favor of the petitioner that § 1692k(a)(3) displaced Rule 54(d)(1) based on the canon of construction that a precisely drawn statute controls over a general rule. Id. at 386

– 87 ( citing EC Term of Years Trust v. United States , 550 U.S. 429, 433 (2007)). The Court rejected that argument and reiterated that “the context of § 1692k(a)(3) indicates that Congress was simply confirming the background rule that courts may award to defendants attorney’s fees and costs when the plaintiff brings an action in bad faith.” Id. at 387. Because petitioner “did not bring th[e] suit in bad faith,” the
case fell outside the statutory provision, and Rule 54(d)(1) therefore applied. See i d. at 387

– 88.

With these background principles in mind, we now turn to whether § 12205 is contrary to Rule 54(d)(1).

B.

1.

We begin, as we must, “with the language of the statute
itself.” United States v. Ron Pair Enters., Inc. , 489 U.S. 235, 241 (1989).

The ADA’s fee

- and cost

- shifting provision states:

In any action or administrative proceeding commenced pursuant to this chapter, the court or agency, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee, including litigation expenses, and costs, and the UnitedG ARCIA V

. G ATEWAY H OTEL L.P. 11

States shall be liable for the foregoing the same as a private individual.

42 U.S.C. § 12205. This is precisely the type of statute that
the Court in Marx held “is not contrary to the Rule because
it does not limit a court’s discretion.” See 568 U.S. at 378. Because § 12205 does not “provide otherwise” than Rule 54(d)(1), the Rule controls the awarding of costs to prevailing ADA defendants

.
2.

As Garcia correctly notes, however, the Supreme Court long ago imbued fee

- shifting provisions in civil rights statutes with a judicial gloss. In Christiansburg

, the Court concluded that, in Title VII cases, courts may award attorney’s fees to a prevailing defendant only where the plaintiff’s action was found to be “frivolous, unreasonable,
or without foundation.” 434 U.S. at 421. And in Brown , we extended the Christiansburg standard for fees to an award of
a defendant’s costs in an action brought under the ADA.

Brown

, 246 F.3d at 1190. Garcia contends that because Christiansburg address ed fee shifting under Title VII , and

Brown address ed cost shifting under the ADA , these cases involved “civil rights litigation,” while Marx

, which
address ed cost shifting under the FDCPA

, did not

. In Garcia’s view, because Congress enacted the ADA
after the Court decided Christiansburg

, Congress intended

to apply the Christiansburg standard for an award of
defendant’s fees to an award of costs under the ADA. Garcia
observes that “the statutory language [ in § 12205] makes fees and costs parallel,” and argues that provides further
evi dence of Congress’s intent to engraft th e Christiansburg
standard for attorney’s fees on to costs awards . Thus, like the12 G ARCIA V

. G ATEWAY H OTEL L.P.

petitioner in Marx , Garcia argues by negative implication
that § 12205 “sets forth the exclusive basis for awarding
costs” to ADA defendants

. See 568 U.S. at 375.

But Marx instructs that we must consider the Christiansburg standard in light of the background presumptions regarding awards for attorney’s fees and costs.
See Marx

, 568 U.S. at 381. These background presumptions convince us that § 12205 does not limit the district court’s discretion in awarding costs and therefore is not contrary to Rule 54(d)(1).

Christiansburg involved the fee

- and cost

- shifting provision in Title VII of the Civil Rights Act of 1964. 434
U.S. at 41 3

– 14 . Title VII included a section that, like § 12205, provided that a district court “in its discretion[] may allow the prevailing party . . . a reasonable attorney’s fee as part of the costs.” Id. at 413

– 14 n.1 (quoting 41 U.S.C. § 2000e

- 5(k)).

The Court in Christiansburg concluded that the most straightforward reading of the statute

— that “[a] prevailing defendant is entitled to an award of attorney’s fees on the same basis as a prevailing plaintiff”

— failed to account for

“ at least two strong equitable considerations” that supported awarding fees to a prevailing Title VII plaintiff but were not present in the case of a prevailing defendant. Id. at 418. First, Congress intended for private rights of action to be the primary enforcement mechanism for violations of civil rig hts. See id. (“[T]he plaintiff is the chosen instrument of Congress to vindicate a policy that Congress considered of the highest priority.” (internal quotation marks and citation omitted)). “Second, when a district court awards counsel fees to a prevailing plaintiff, it is awarding them against a
violator of federal law .” Id. These two considerations ledG ARCIA V

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the Court to conclude that Congress could not have intended to award defendants their attorney’s fees on the same basis as a prevailing plaintiff. Id. at 418

– 19.

But critical to this case, the Court also explained that Congress could not have intended for defendants to be limited to a fee award “only in a situation where the plaintiff was motivated by bad faith in bringing the action.” Id. at 419. After all, “if that had been the intent of Congress, no statutory provision would have been necessary, for it has long been established that even under the American

common

- law rule attorney’s fees may be awarded against a party who has proceeded i n bad faith.” Id

. ; see Marx , 568 U.S. at 382 (“[W]e have long recognized that federal courts have inherent power to award attorney’s fees in a narrow set of circumstances, including when a party brings an action in bad faith.”). Considering this background presumption alongside leg islative history that demonstrated Congress

“ wanted to protect defendants from burdensome litigation having no legal or factual basis,” the Court concluded that “a district court may in its discretion award fees to a prevailing defendant . . . upon a f inding that the plaintiff’s action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith.” Christiansburg , 434 U.S. at 420

– 21.

Thus, in announcing the rule that defendants could only
recover their attorney’s fees on a showing that the action that was frivolous, unreasonable, or without foundation, the
Court gave force to Congress’s intent to protect both plaintiffs’ interests in bringing civil rights actions without fear of ruinous financial consequences and defendants’ interests in avoiding defending against patently meritless
suits. See id. These competing interests led the Court to adopt a test for awarding defendants attorney s’ fees that is14 G ARCIA V

. G ATEWAY H OTEL L.P.

less demanding than the background presumption. See id. at
419.

Under Garcia’s reading, however, defendants do not
receive their costs upon meeting a less demanding standard than the background presumption that “prevailing parties are entitled to costs,” Marx

, 568 U.S. at 377 ; indeed, under Garcia’s reading, defendants do not receive costs even upon meeting the background presumption. Instead, Garcia insists that Congress intended for defendants to demonstrate
that an action was frivolous, unreasonable, or without
foundation in order to receive costs. This reading lea ds to the illogical conclusion that Congress intended for attorney’s fee awards to be governed by a less demanding standard than
the background rule but for cost awards to be governed by a more demanding standard than the background rule . The better reading, as the Court explained in Marx , is that Congress intended for the less demanding standard to apply

to an award of attorney’s fees while leaving the background rule for costs intact. 568 U.S. at 382 (“Because § 1692k(a)(3) codifies the background rule for attorney’s fees, it is dubious to infer congressional intent to override the background rule with respect to costs.”). And this reading finds particular force whe n , as here, the statute parallels Rule 54(d)(1) in providing that costs “should be allowed to the prevailing party.” Compare Fed. R. Civ. P. 54(d)(1), with 42 U.S.C. § 12205 (permitting the court to allow costs to “the prevailing party”); see also Marx

, 568 U.S. at 386 (explaining that other fee

- and cost

- shifting provisions in
Title 42 “overlap with Rule 54(d)(1)” by providing for an award of costs to prevailing parties (citing , e.g., 42 U.S.C. §§ 3612(p) and 3613(c)(2)) )

. In short, the background presumptions for awarding fees
and costs

, combined with c ongressional intent as explainedG ARCIA V

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in Christiansburg

, demonstrate that, in permitting fee
awards for civil rights defendants only on a showing that an action was “frivolous, unreasonable, or without foundation,” Congress did not intend to displace th e background presumption that costs may be awarded to prevailing parties.

3.

Garcia next argues that § 12205 is contrary to Rule 54(d)(1) because it is akin to “other statutes in which Congress has placed conditions on awarding costs to prevailing defendants.” See Marx , 568 U.S. at 384

. A

cursory review of these statutes demonstrate s they are distinguishable. For example, 28 U.S.C. § 1928 provides that costs may not be included in a judgment for patent infringement “unless the proper disclaimer has been filed in the United States Patent and Trademark Office prior to the
commencement of the action.” Simil arly, 42 U.S.C. § 19 8 8(b) provides that costs are not available “in any action brought against a judicial officer for an act or omission taken in such officer’s judicial capacity . . . unless such action was clearly in excess of such officer’s jurisdiction.” Thus, unlike § 12205 and Rule 54(d)(1) , these statutes presume that costs

are unavailable , and the plaintiff must show certain
conditions have been met to recover costs . And the conditions imposed on collecting costs in these statutes have
no relation to the background presumptions related to fees and costs, and thus do not indicate c ongressional intent to specifically displace those presumptions. Because Garcia fails to demonstrate that Congress specifically intended to place conditions on awarding costs to prevailing ADA defendants in § 12205, we again conclude that section is not contrary to Rule 54(d)(1).16 G ARCIA V

. G ATEWAY H OTEL L.P.

I V

. Garcia’s arguments on appeal require us to consider our holdings in two previous cases: Brown and Green v. Mercy Housing, Inc. , 991 F.3d 1056 (9th Cir. 2021). According to Garcia, Brown held that “awards of costs are not permissible against ADA plaintiffs without a showing of frivolousness,
lack of merits or unreasonableness.” He insists that Brown remains binding precedent

, notwithstanding Marx

, and points to our recent decision in Green as reiterating Brown ’s continued vitality. And because

, in Garcia’ s view

, Brown still controls, he concludes that the Christiansburg standard applies to costs and displaces Rule 54(d)(1).

We first consider whether our holding in Brown can be
reconciled with Marx before briefly considering Green

.
A.

In Brown

, we primarily considered the application “ of
the ADA’s so

- called ‘ safe harbor ’ provision, ” 42 U.S.C. § 12114(b)(2), which extends the Act’s protections to individuals participating in supervised rehabilitation programs who ha ve ceased drug use. 246 F.3d at 1186. We also briefly considered “the standard to be used in denying costs to a prevailing defendant under the ADA.” Id. We
determined that the Christiansburg standard governed awarding fees under § 12205 and concluded that, “[b]ecause § 12205 makes fees and costs parallel, . . . the Christiansburg test also applies to an award of costs to a prevailing defendant under the ADA.” Id. at 1190.

To harmonize Brown ’s invocation of the Christiansburg
standard to determin e an award of costs to an ADA
defendant with Marx , we would be required to read Brown

a s applying only when an action was “frivolous,G ARCIA V

. G ATEWAY H OTEL L.P. 17

unreasonable, or without foundation,” see Brown

, 246 F.3d at 1190, and conclude that Rule 54(d)(1) governs costs in all other circumstances. Thus, we would read Brown ’s
invocation of Christiansburg in much the same manner as the Court in Marx read § 1692k(a)(3)’s invocation of “bad
faith and for the purpose of harassment” as a basis for awarding costs to prevailing defendants as limited to those
circumstances

. See Marx

, 568 U.S. at 374, 387. In Marx

, the Court explained that § 1692k(a)(3) may govern the
award of costs where the defendant shows the suit was brough in bad faith and for purposes of harassment but that, where this showing is not made , Rule 54(d)(1) would control as the background rule. See id. Because we apply the
Court ’s reasoning in Marx to reject the argument that § 12205 has a negative implication, we can similarly read

Brown ’s invocation of the Christiansburg standard as simply inapplicable where, as here, the district court did not make a finding that the action was frivolous, unreasonable, or
without foundation. See Marx , 568 U.S. at 387 (“The statute speaks to one type of case

— the case of the bad

- faith and harassing plaintiff. Because Marx did not bring this suit in bad faith, this case does not fall within the ambit of” § 1692k(a)(3) (internal quotation marks a nd alteration omitted)). And because § 12205 does not apply to Garcia’s action, Rule 54(d)(1) does. See id.

The problem with this reading is that in Brown we explicitly stated that the Christiansburg standard permits an award of attorney’s fees to the defendant “ only if the plaintiff’s action was frivolous, unreasonable, or without
foundation.” Brown

, 246 F.3d at 1190 (emphasis added) (internal quotation marks and citation omitted). We further explained that “[b]ecause § 12205 makes fees and costs parallel, we hold that the Christ iansburg test also applies to18 G ARCIA V

. G ATEWAY H OTEL L.P.

an award of costs to a prevailing defendant under the ADA.”
Id

. Thus, Brown is more reasonably read as holding that ADA defendants are never permitted an award of costs without a finding that the action was frivolous, unreasonable,
or without foundation. And that reading is irreconcilable
with Marx

.
I n Brown

, we considered the standard for awarding fees without the benefit of the Supreme Court’s guidance in Marx
that such standards are to be evaluated based on “the background presumptions governing attorney’s fees and
costs.” Marx

, 568 U.S. at 381. Had we decided Brown with
the benefit of that guidance, we likely would have concluded that, although the statute considers awarding fees and costs in parallel, it does so cognizant of the background presumption that the standard for awarding defendants ’ fees is more demanding than the standard for awarding
defendants ’ costs. And, for reasons explained above, see

supra § II I .B .2, considering § 12205’s text in light of these background presumptions compels the conclusion that costs may be awarded to prevailing defendants without a showing of frivolousness, unreasonableness, or a lack of foundation,
which is consistent with Rule 54(d)(1).

Thus, while cognizant of our obligation to apply our existing precedent consistently with higher authority whe n possible, see Rodriguez v. AT&T Mobility Serv s

. , LLC , 728 F.3d 975, 979

– 80 (9th Cir. 2013), we conclude that to the

extent Brown allows an award of costs to ADA defendants only on a finding that the plaintiff’s action me e t s the Christiansburg standard, that conclusion has been “undercut” by the Supreme Court’s opinion in Marx “in such a way that the [two] cases are clearly irreconcilable

, ” Miller

, 335 F.3d at 900. Remaining faithful to the binding precedent of the court of last resort, we conclude that Brown has beenG ARCIA V

. G ATEWAY H OTEL L.P. 19

effectively overruled by Marx and hold that an award of costs to ADA defendants is governed by Rule 54(d)(1).

B.

Finally, Garcia points to Green , in which we applied

Brown to hold that “a plaintiff bringing suit under the Fair Housing Act should not be assessed fees or costs unless the court determines that his claim is ‘frivolous, unreasonable, or groundless.’” Green

, 991 F.3d at 1058 (quoting Christiansburg , 434 U.S. at 422). According to Garcia,
because Green was “decided nearly a decade after Marx ” and “applies the exact same rationale as Brown ,” Green ’s holding demonstrates that Brown and Marx are reconcilable.

But there is no indication in Green that we considered Marx when determining the proper standard for awarding
defendants their costs , and a review of the briefing and the oral argument in that case reveals that the parties did not
raise Marx

. 2 Therefore, we reject Garcia’s suggestion that

2 See Consolidated Opening Brief for Appellant Rodney Green, Sr., at

48

– 49, Green v. Mercy Housing, Inc. , 991 F.3d 1056 (9th Cir. 2021) (Nos. 20

- 15134, 20

- 15358), ECF No. 20 ( arguing that the court should
extend Brown to costs awards under the FHA because the “ADA and FHA fee/costs statutes are strikingly similar,” but with no mention of

Marx ); Consolidated Answering Brief for Appellee Mercy Housing, Inc.,
et al

. , at 56

– 57, ECF No. 31 (arguing that the court should not extend the holding in Brown to an award of costs under the FHA because “the cost provisions of the ADA and the FHA are fundamentally dissimilar,” with
no mention of Marx ); Consolidated Reply Brief for Appellant Green at

12

– 14 , ECF No. 41 (arguing that the Ninth Circuit should follow out

- of

circuit precedent to apply the Christiansburg standard to the recovery of costs under the FHA, with no mention of Brown or Marx ); see also Oral Argument, Green v. Mercy Housing, Inc. , (No. 20

- 15134), http://www.ca9.uscourts.gov/media (argument focusing on several issues on appeal, but only brief ly address ing the award of costs without any mention of Marx ).20 G ARCIA V

. G ATEWAY H OTEL L.P.

in Green we concluded, sub silentio, that Brown and Marx
are reconcilable.

Moreover, “ [q] uestions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” Cooper Indus

. , Inc. v. Aviall Servs.,

Inc.

, 543 U.S. 157, 170 (2004) (citation omitted). Or as we recently reiterated, “[p]rior precedent that does not ‘squarely address’ a particular issue does not bind later panels on the question.” United States v. Kirilyuk , 29 F.4th 1128, 1134 (9th Cir. 2022). 3 Because Green did not consider Marx in the context of determining the appropriate standard for awarding defendants their costs, we reject Garcia’s argument that its holding evinces that Brown and Marx may be
reconciled.

V.

In conclusion, we hold that the fee

- and cost

- shifting provision of the ADA, 42 U.S.C. § 12205

, is not contrary to Rule 54(d)(1) and that, consistent with th at Rule, a

3 See also, e.g.

, Brecht v. Abrahamson , 507 U.S. 619, 630

– 31 (1993) (rejecting argument that stare decisis required the application of a particular harmless

- error standard in habeas cases because “we have never squarely address ed the issue, and have at most assumed the applicability of the Chapman standard on habeas,” and concluding “we are free to address the issue on the merits”); United States v. Ped , 943 F.3d 427, 433

– 34 (9th Cir. 2019) (concluding that even though prior

cases had stricken invalid sentencing provisions without remanding

, that
did not mean th e pr actice was appropriate because “[i]n none of those cases did we discuss section 3742(f)(1) or consider how it affected our authority to modify a sentence without remanding”); United States v. Pepe , 895 F.3d 679, 688 (9th Cir. 2018) (“Just as cases are not precedential for propositions not considered, . . . Clark does not foreclose an interpretation of the statute that it didn’t consider . . . .”).G ARCIA V

. G ATEWAY H OTEL L.P. 21

prevailing ADA defendant may be awarded its costs at the district court’s discretion and without a finding that the action was frivolous, unreasonable, or without foundation.
To the extent that this holding conflicts with Brown , we conclude that Brown is irreconcilable with , and effectively overruled by, the Supreme Court’s opinion in Marx

. Because Rule 54(d)(1) controls whether defendants may be awarded costs in this ADA action, the district court did
not abuse its discretion in denying Garcia’s motion to retax
costs, thereby keeping its prior award of costs to Gateway
intact

.
AFFIRMED.

HURWITZ, Circuit Judge, dissenting:

I agree with the majority that after Marx v. General Revenue Corp. , 568 U.S. 371 (2013), Rule 54(d)(1) controls the award of costs to a prevailing defendant in an ADA action. I also agree with the majority that our prior caselaw holding that the ADA “provides otherwise” than Rule 54(d)(1) cannot be reconciled with Marx. But, I part company with my colleagues on whether our three

- judge panel is free to reach these conclusions.

I.

In Miller v. Gammie , we held that a three

- judge panel is bound by the opinion of a prior panel absent a conflicting “subsequent” or “intervening” Supreme Court decision. 335 F.3d 889, 899

– 900 (9th Cir. 2003) (en banc). If Brown v. Lucky Stores, Inc.

—

which held the ADA allowed an award of costs to a prevailing defendant “only if the claim was22 G ARCIA V

. G ATEWAY H OTEL L.P.

frivolous, unreasonable or lacking foundation,” 246 F.3d 1182, 1186 (9th Cir. 2001)

— were our only relevant precedent, our task would be easy because Marx intervened
between Brown and this case.

But, Brown is not our only relevant precedent. In Green v. Mercy Housing, Inc. , decided after Marx , we held that an identical costs provision in the Fair Housing Act only allows a costs award to a prevailing defendant on the same heightened showing. 991 F.3d 1056, 1057

– 58 (9th Cir. 2021). 1 Because Green came after Marx

, Marx plainly did
not “intervene” between Green and the case now before us. See United States v. Eckford , 2023 WL 5210863, at *5 (9th Cir. Aug. 15, 2023); CoreCivic, Inc. v. Candide Grp., LLC

, 46 F.4th 1136, 1141 (9th Cir. 2022).

II.

The majority excuses the absence of an “intervening” Supreme Court decision because the Green panel did not
address whether Marx had abrogated Brown . The majority
therefore concludes that Green is not precedential. But, the very issue for decision before us today

— whether a prevailing defendant in an ADA action may be awarded costs absent proof that the complaint was frivolous, unreasonable, or lacking in foundation

— is precisely the one
decided in Green . Put differently, Green is exactly on point;
whether correctly decided or not, it squarely stands for the proposition that Rule 54(d)(1) does not apply.

1 In a subsequent memorandum disposition, a panel held, without citing

Marx , that Green controlled costs awards under the ADA and FHA. See Yellowstone Womens First Step House, Inc. v. City of Costa Mesa , 2021 WL 4077001, *2 (9th Cir. Sept. 8, 2021).G ARCIA V

. G ATEWAY H OTEL L.P. 23

I am aware of no case

— and the majority has cited

none

— holding that a three

-

judge panel of this Court may ignore an opinion expressly on point simply by finding that it did not correspond with a prior Supreme Court opinion. To be sure, we need not treat ca ses that do not expressly decide an issue as implicitly doing so. Thus, United States v. Kirilyuk , cited by the majority, held that prior opinions interpreting an Application Note according to its terms did not implicitly hold that the Note was consistent with the governing Sentencing Guideline. 29 F.4th 1128, 1134

– 35 (9th Cir. 2022). But here, we need not imply a holding from a prior opinion’s silence. Rather, Green expressly resolves today’s issue

—

whether Rule 54(d)(1) applies to an award of
costs under the ADA.

III.

Because I agree with the majority that Marx is not conciliable with our previous ADA and FHA costs jurisprudence, my concern with following the Miller three

judge panel rule may on the surface seem overly technical. But, if we have a rule, we are required to follow it until changed by the appropriate panel. And, if we today allow a
three

- judge court not to follow Circuit precedent when it
conflicts wi th Supreme Court decisions handed down before our precedent, future three

- judge panels may well feel free to abrogate Circuit precedent even when the conflict with a

non

- intervening Supreme Court ruling is not as clear as it is today. We avoid that potential problem by following Miller

. The proper course

— even when the eventual outcome is, as today, seemingly preordained

— is to require an en banc court to inter our previous decisions unless an intervening Supreme Court abrogates them.